Fortune Oil begins CBM drilling in China

Nov. 10, 2006
A unit of Fortune Oil PLC has begun drilling its first pilot well on the Liulin Block in the eastern Ordos basin of Shanxi Province, China. The Ordos basin is one of the world's largest CBM resource areas.

By OGJ editors
HOUSTON, Nov. 10 -- A unit of Fortune Oil PLC has begun drilling its first pilot well on the Liulin Block in the eastern Ordos basin of Shanxi Province, China. The Ordos basin is one of the world's largest CBM resource areas.

Fortune Liulin Gas Co. Ltd., which entered into a production-sharing contract for development of the coalbed methane (CBM) block, spudded the FL-EP2 vertical production well on Nov. 7. The company plans to drill this well to a TD of 1,155 m and take core samples from coal seams numbers 4, 5, and 8.

A second vertical pilot production well�FL-EP1, targeting 610 m TD�will be drilled later this year.

After the two wells are complete, Fortune will fracture stimulate Seam 8 in both wells and will monitor production rates of CBM gas and water over the following months.

More than 70 coal coreholes and several CBM exploration wells have been drilled in the Liulin Block. The available data indicate that coal seam thickness, depth, gas content, and permeability appear to be highly prospective.

Fortune recently completed a joint study with the Shanxi Coal Bureau to analyze and map this data, which was used to optimize the locations for FL-EP1 and FL-EP2. The wells should provide significant reservoir and production data to assist in certification of gas reserves on the block, although it will not be possible to properly quantify the results until second quarter 2007.

The company has procured all necessary environmental permits for drilling in 2006-07. Further pilot production and slim-hole data wells are planned for 2007, with the aim of declaring commerciality for the block in 2008.

Fortune, now the first international company to be operating in both the upstream and downstream gas distribution sectors in China, said it will continue to seek both CBM and gas distribution investment opportunities in and around Shanxi Province.